Why Should a Healthy, SEG-Based Credit Union Merge?: Guest Opinion

A few years ago, I had the pleasure of being elected the president of the board of an arts organization in my home city of St. Louis. The group was mostly healthy but the economy was in the tank. We started soul searching. How were we different than any of the other seven arts organizations in town that were all competing for the same artist members and same fund raising buckets? Our board and our members said, “we’re better.” But how and was it enough? What was our relevance? Were we really that different from the others?

Well, the arts organization is still there (and in my wallet), but we seriously considered merging. They retained their relevance but it took a new executive director, a new vision, and a new facility. The old relevance was no longer relevant.

That’s the same reason a healthy credit union shouldconsider merging. Before the letters start flying in, recognize I don’t necessarily advocate doing it. Considering is different than doing.

Everyone sees the numbers. Credit unions are disappearing at the rate of one per business day and we know the reasons: the regulators said so; the economy tanked and so did the credit union; the credit union got tired of fighting the regulatory battle; their original select employee closed up shop; the CEO retired and there was no succession plan; the CEO got the deal of a lifetime and bailed.Those are arguably good logical reasons to merge. But what if you’re healthy, well-managed, and coping well? Why, you ask? It’s because of relevance.

We know how we got here. A group of people with a common bond got together for a common cause. There was relevance that usually stemmed from the need for credit for workers of the original sponsor company.

We can only compete in so many ways: convenience or location, price, service, products and affinity, among others. But do we have that relevance or ­competitive edge today? Are our members still borrowers, or like many of the graying members of credit unions, do they just want the best CD rates?

I lead a lot of planning sessions and the question of relevance is paramount. It’s hard to ask the question, “would our members be better off as a member of XYZ CU?” They offer better rates, more products and more branches. Every credit union I have ever dealt with firmly believes they give the best service in the whole world so I’m taking that differentiator off the table.

The answer depends on relevance. We know we’ve been relevant but will we continue to be five years from now? Will the board still represent the interests of their active members? Will new volunteers be recruited? I don’t advocate mergers for mergers sake. There are a lot of credit unions that will maintain their relevance but they are usually the ones that ask and answer the hard questions.